6 Tips for Using Your First Credit Card Wisely

Credit cards are everywhere. Offered by financial institutions, retailers, and other companies, a credit card can be a very convenient form of payment when you don’t have cash available. But for young adults starting out on your own, the first thing you should do is learn about credit cards before applying for one.

1. Don’t apply for credit you don’t need.
Make sure that you’re in a position financially to apply for a credit card and really consider why it is you want or need one. If you have reservations or don’t feel entirely confident that you can make regular payments, then it’s probably in your best interest to wait and seek other financial options, like a personal loan, supplementing your income, or reducing your other debts.

2. Credit is not free money.
Remember that you have to pay back whatever you spend, plus interest. While credit can be very helpful and it’s good to build your credit history, make sure you know what your interest rate is and how payments work before you begin using your credit card for purchases or a cash advance. Impulse spending can get you in over your head, but careful spending habits can benefit you for a long time.

3. Credit can help when emergencies arise.
When you get your first credit card, you may not have had time to save up an emergency fund in your Checking Account. Thankfully, a credit card can be helpful for sudden, unanticipated costs. You can use your first credit card to cover these costs, and then pay it off as soon as you can. You’ll be grateful to have your credit card as an option when you need it.

4. Pay in full and on time.
To build good credit with your first credit card, make regular, timely credit card payments in full if possible, or at least above the minimum payment amount. If you only pay the minimum, you’ll notice your credit card balance may not go down as quickly because you’re mostly paying interest and very little principal. Pay as much over the minimum as you can, and pay it off as quickly as possible to keep your credit score up and build a positive credit history.

5. When you spend smart, using credit can really pay off!
When you use your first credit card wisely, you’re setting yourself up for a positive credit history and good credit score from the start. This can help you get better interest rates, terms, and premiums when it comes to new credit cards or insurance down the road. A positive credit history can also help you in other aspects of your life. Since loan providers, financial institutions, and even landlords review your credit history before deciding if you’re a good investment, you’ll benefit in more ways than one from a good credit score. As a responsible credit user, you’ll be happy to discover more options are available to you when applying for a Home or Auto Loan.

6. Keep accounts open and active.
When calculating your credit score, credit bureaus take into consideration how long you’ve had an open line of credit. So, even if you get another credit card or two down the road, it’s important to keep your first one open – and even better, active and paid off – as it shows how consistent and responsible you are financially.

Ready for your first credit card? A Robins Financial Credit Union Visa® Platinum Rewards card is one of the best credit cards you can carry. To learn more about other products we offer that can help build your credit, give us a call or visit any of our branches.

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